The technology explosion worldwide, particularly in e-commerce, and the value of patents in securing ownership of technology have caused the number of United States patents to grow dramatically.
An important public policy basis for the patent system is the advancement of technology by requiring inventors to enrich public knowledge through the publication of their inventions in a patent in exchange for a monopoly. The public thereby applies its increased knowledge to develop further inventions. A counterpart to this policy is that the Patent Office will not grant patents for inventions which are already publicly known. Evidence of public knowledge is found in “prior art,” such as U.S. or foreign patents, published patent applications, published or unpublished but publicly available articles, textbooks, drawings, photographs, printed or handwritten documents or references, brochures, advertisements or other references, commercially available products or other evidence of publicly known technology or technology which has not been abandoned, suppressed or concealed, such as models, prototypes, commercial products or testimonial evidence of prior use, sale or knowledge, etc. (hereinafter called “prior art references”). Patentability involves analyzing prior art reference(s) in order to determine whether it explicitly or implicitly teaches an invention, for example, as described in a claim of a patent or patent application. If multiple prior art references contain relevant teachings, there is a further determination as to whether teachings from one or more documents can be combined to teach the claim.
The Patent Office's grant of a patent does not afford guaranteed patent protection. U.S. courts can further review a patent. This review involves the same analysis as the patentability determination performed by the Patent Office on a patent application. However, it is referred to as a validity analysis because it relates to an issued patent rather than a patent application. Courts review the patent when its validity arises during patent infringement litigation, i.e., when a patent owner charges a party with infringement, or during a declaratory judgment action, i.e., when a party threatened with infringement asks a court to declare a patent invalid. Therefore, even if the Patent Office has determined that the claims of an application are patentable so that a patent issues, a court may later determine that one or more of the patent claims are invalid.
When a court reviews a patent during litigation, it analyzes the prior art that was considered by the Patent Office and may also review additional evidence of prior art presented by the parties to the litigation. Parties gather evidence in the fact-finding stage of litigation, called discovery, during which they generally do extensive searches for prior art. The search for such evidence by litigants is normally very expensive. As a result, they generally find prior art that the patent Examiner did not have at his disposal during the Patent Office examination. New prior art at the litigation stage is less desirable for the patent owner than during Patent Office examination because the patent owner cannot tailor the claims to avoid the prior art. Rather, the claims stand or fall as presented in the patent. On the other hand, this stage is helpful for a potential infringer because new prior art in litigation gives the court additional bases to find the patent invalid. Also, it is easier to invalidate a patent in litigation based on new prior art than on prior art that was considered by the Patent Office.
The courts are the final arbiters of patents. As a result, when the courts ultimately determine that a patent is invalid, the patent owner loses his legal rights to the protections of the patent. In addition, when a patent is invalid, it cannot be used as a basis for a patent infringement complaint. Therefore, with rare exceptions, patent validity is a key issue in litigation because a finding of invalidity requires a dismissal of an infringement complaint for a product or process that could otherwise be found to infringe the patent.
Patent applicants, patent owners and alleged infringers are not the only parties interested in the validity of patents. Most importantly, members of the public benefit from patents having strong bases for validity. This is because patent owners can charge a premium for products or processes covered by patents. This premium is based on the patent right of excluding others from commercializing (among other things) technology covered by the patent claims. The public cannot recover premiums paid based on a patent which a court later finds to be invalid.
Also, the financial community is interested in the validity of patents in making investment decisions. Companies can also benefit from greater knowledge about the validity of third party patents in determining whether they must design around a competitor's patent or commercialize a potentially infringing product based on one or more competent opinions from individual attorneys that the patent is invalid. In addition, patent owners who consider commercializing a product covered by their patent benefit from greater information about whether competitors can be excluded from their market based on strong patent protection. Similarly, the validity of patent portfolios for public companies can affect stock prices, and knowledge about the validity of patents is applicable to valuing the company that owns the patents.
Therefore, there are myriad scenarios in which the validity of patents is important to the general public, patent applicants, owners, competitors and the financial community. Consequently, comprehensive prior art with which to evaluate patentability and validity increases the strength of the patent system by decreasing the number of invalid patents, narrowing the claims during Patent Office examinations to define valid inventions in view of more comprehensive prior art and, for applications which issue as patents, increasing the number of meritorious patents such that the cost to the public of monopoly pricing is better justified.
In addition, since Examiners' resources for identifying prior art during examination can be limited, additional or more relevant prior art is generally presented during litigation. As a result, a large percentage of patents litigated are found to be invalid. This means that during the period between patent issuance and the outcome of litigation, patent owners have legal rights to the patented technology, including the potential for monopoly pricing. Moreover, only a very small percentage, determined historically to be about 1.5% of issued patents are actually litigated. As a result, for the remaining about 98.5% of patents, validity is never analyzed by a court.
As a result, there is a need for increasing the amount and quality of prior art that is found. Common methods of finding prior art are computer searches of patent or technical databases and hand searches of paper copies of prior patents, publications and foreign patents at the Patent Office. Members of the public also hire third party researchers, for example, technical experts or consultants, patent researchers or general researchers to conduct searches for them; Examiners perform their own searches. Third party researchers are paid a fee for providing search results, whether the results are relevant or not. Other common methods of finding prior art for members of the public are to subpoena companies or individuals for such prior art. These approaches are general research techniques well known to those of ordinary skill in the art and will not be described further herein.
There was an instance in which members of the public were requested to send relevant prior art to a central source, in this case, a company, which was sued for patent infringement. More particularly, Netscape presented a request on a web site which it hosts called mozilla.org (the text is available as of Feb. 10, 2000 at http://www.mozilla.org/legal/wangsuit.html) for prior art to defend against a patent infringement action by Wang (based on U.S. Pat. No. 4,751,669). The request was therefore made available to visitors of Netscape's mozilla.org web site. Visitors were asked to respond by providing prior art to invalidate the patent claims on a gratuitous basis. As of Feb. 10, 2000, Netscape reported that the case settled.
Another company, BountyQuest, had a web site offering payments to those who can prove or disprove patent claims and providing a means to settling patent disputes between companies. The company hoped to exploit the concerns of those who felt that the US Patent Office was failing to serve the new economy. BountyQuest encouraged scientists, engineers, professional researchers or any people with specialised knowledge to find evidence critical to issues of patent validity. BountyQuest essentially created a human search engine of knowledgeable “Bounty Hunters” who track down this type of fugitive information for cash rewards. BountyQuest rewards started at $10,000 and were a fixed monetary amount included in the announcement of the bounty.
The understanding on Wall Street is that there are two ways to acquire patent information to accurately value stocks, acquisition or litigation, both of which are unpredictable as to timing (these activities take years) and the result. For example, Local.com announced patents covering the “industry standard for local search” in June/July 2007. On June 29, a Yahoo Finance analyst picked up a posting from a financial blog about the patent announcement. Local.com went from a sleeper to being ranked among the 20 most active U.S. stocks on July 2nd with an increase of 70% to $8.96. The stock price as of July 17 was maintained at $8.85. Wall Street clearly identified it as an event with extraordinary impact on the stock. It was reported in a Barron's article entitled “Local.com Shares In A Patent-Driven Frenzy.” Commentators went further, offering that further stock valuation/correction is based on a wait and see approach. “[H]ow these new patents will affect the stock is hard to determine. ‘The patents make it more attractive but how much is anybody's guess . . . “You don't know if other people are infringing on the patent. You don't know how broad the patent is. You don't know if they're going to fight it and demand money from company's [for patent infringement], and you don't even know if the patent is valid until it gets tried in court . . . ’” said Jon R. Hickman, an analyst at MDB Capital Group.
There is a need to improve the comprehensiveness of prior art for patent applications and issued patents generally. There also is a need to enable the public to recover some of the premiums paid for patents later found to be invalid. Further, there is a need for a forum in which prior art can be requested for a broad variety of patents or other technical or non-technical subject matter and the public can view the multiple and varied requests and submit responses. With a broad range of prior art requests, such a forum can attracts a large audience, which increases the chance of receiving relevant prior art in response.